Prospect magazine would like to apologise to our readers for failing to predict the economic crisis and for being far too deferential to Britain’s financial and political leaders who, it is now clear, are mainly greedy, myopic nincompoops. Actually, what we in the political, business and media classes should be apologising for is an unseemly and ubiquitous display of wisdom after the event. It almost makes one want to hug a banker. It certainly makes me sympathetic to accounts of the crisis that spread blame around more fairly. Consider this from Rudi Bogni (a Prospect board member) writing in Wilmott magazine: “It is said that the financial system has undermined the real economy. I put it to you that it might be the opposite: that an unstable western economy, built on excessive social and political expectations, was buttressed for too long by the financial economy through the magic of ever-increasing leverage, until they both cracked under the weight.”
Bogni has at least half a point. For his part, Anatole Kaletsky (p46) wants to switch the blame from greedy bankers to conservative, mathematical economists. I had assumed that those free market economic theses known as the “rational expectations hypothesis” and the “efficient market hypothesis” had long since been sidelined, but Kaletsky shows how they have continued to rule the intellectual roost where it matters.
Geoff Mulgan’s cover story is less concerned with apportioning blame than with peering ahead to see whether we are heading for another great “accommodation” between the market and society, similar to that in the mid-20th century. His prediction of a social democratic taming of capitalism may be a matter of the wish being the father of the thought—but he dares to think big on the way to that benign forecast. One thing he doesn’t consider, though, is who the new dominant class for the new era of capitalism will be. If the 1960s and 1970s were the hour of the public sector technocrat and union leader and the 1980s onwards brought us the financiers, who will lead us now?
Our contribution to the 20th anniversary of the Rushdie affair is an interview with the writer Hanif Kureishi, who can reasonably claim to have predicted the rise of a youthful Islamic extremism in Britain. Few people doubted Rushdie’s right to publish The Satanic Verses in 1989, but by 2005 there was almost as big a consensus against publishing any of the skittish Danish newspaper cartoons of Muhammad—in the name of the self-censorship that is supposedly required to make multiculturalism work. Or as Kureishi puts it: “Nobody would have the balls today to write The Satanic Verses.”